Tesla really needs Ethereum
This article comes fromMedium, original author: Pen Magnet
Odaily Translator |
Odaily Translator |
- On January 29, 2020, Elon Musk, the founder of the electric car giant Tesla, changed his Twitter signature to "#bitcoin", after which the price of Bitcoin soared by 20%;
- On February 9, 2020, Tesla "suddenly" announced that it had purchased $1.5 billion worth of Bitcoin, causing the price of Bitcoin to soar again by about 10%.
Now, cryptocurrency investors and even quite a few senior market analysts are predicting that Bitcoin will break $100,000 next, because the "King of Cryptocurrencies" has a limited supply and there will never be 21,000,001 Bitcoins in the world. Before Bitcoin, Elon Musk once "sent Dogecoin to the moon", but what many people don't know is that 22 months ago - on April 30, 2019, Elon Musk also "said the order "Ethereum:
Elon Musk then asked another question: What should be developed on Ethereum?
To this question, Larry Cermak, research director of the blockchain media The Block, responded:"I don't know if Ethereum is the right platform, but”
The Tesla micropayment economy may be an interesting ecological project attached to Ethereum, such as paying charging fees, parking fees, tolls, traffic congestion fees, etc.
Then Vitalik Buterin, the co-founder of Ethereum, invited Elon Musk to participate in Devcon, the Ethereum developer conference, in October 2019.
But what is surprising is that this series of actions by Elon Musk did not cause the price of ETH to skyrocket like Bitcoin. Although Ethereum is indeed "inferior" to Bitcoin most of the time, it is also the second largest cryptocurrency by market value after all. ah! In fact, we found that the two ecosystems are actually different, and the two ecosystems should be:
1. One is Tesla + ETH token
2. One is the Tesla + Ethereum blockchain
When Tesla spent $1.5 billion to buy Bitcoin, its purpose was actually very clear: to use Bitcoin, the current most inflation-resistant "currency," to increase its future cash reserves.
but,but,
Tesla's real goal is not to be a "king", but to create a "king".
In fact, there is a big difference between ETH and BTC two cryptocurrencies, ETH can be supplied infinitely. This is so because it was designed for a very different purpose than Bitcoin, which is generally not affected much by the volatility of traditional currency markets. Despite this, the market capitalization of ETH is still doing well, ranking second only to Bitcoin.
Here, we are not actually talking about the ETH token, but the Ethereum blockchain, so it can explain why ETH is not the "king of cryptocurrencies", but it is much more powerful than the "king" - to understand this, We have to review some history and related basics.
Today, the web is littered with blockchain definitions, and for the sake of simplicity, this article only discusses ETH and Ethereum. Ethereum is a blockchain, and so is the Bitcoin network that mines BTC tokens. Although blockchains have historically been used to represent distributed ledgers (i.e., lists of transactions distributed across computer nodes), they are now The term blockchain is now also used to describe decentralized applications (DApps), where transactions are conducted on a blockchain network without any central actor calling the shots.
For example, in the traditional financial industry, if Party A pays $5 million to Party B, the transaction and its records will be stored in the bank server. But in the cryptocurrency world, if Party A pays Party B 5 BTC, the transaction happens on any one of the thousands of servers running the Bitcoin network, just like a movie is downloaded and uploaded on BitTorrent, any server in the server One can get a copy of this transaction.
What's more: if a rule change is made to this, the owner of each computer (node) will at least be aware of the rule change, and many times, they will be able to vote on it as well. In short, this is decentralized governance.
Compared to Bitcoin, Ethereum is a special blockchain capable of running P2P decentralized applications (DApps) on top of itself. We know that the word DApp has been introduced to describe the blockchain (transaction processor + ledger), but has now been given a broader definition, namely: any P2P decentralized application that runs on top of the blockchain Both can be called DApps. In 2017, an online game called Cryptokitties became popular. In fact, it is not only a game, but also a DApp running on the Ethereum network, and its back-end code is on the Ethereum node. Instead of relying on private servers or cloud servers like AWS/Azure/GCP - as of today, Cryptokitties are still running.
Ethereum provides a payment mechanism for application developers to pay node owners, and implements this mechanism through the following 2 steps:
2. DApp developers pay the blockchain network (node owners in Ethereum) to execute running requests on behalf of end users. These transactions require the use of ETH tokens based on gas fees.
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Why did Elon Musk fail to "call out" Ethereum before?
In fact, even if Elon Musk decides to buy $5 billion worth of ETH, he still probably won’t be able to change the price of ETH, because in general, there are only two ways to affect the price of ETH tokens:
Path 2: More DApps appear => application developers need more ETH tokens to pay for the Ethereum network => market demand for ETH will grow organically => drive ETH price growth. This growth will not be easily reversed as everyone invested and the ETH token creates tangible value for DApp end users (not just market speculators).
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So, will Tesla buy ETH?
It's certainly possible, and Tesla would certainly be better off investing its cash reserves in the same way they invest in Bitcoin. But the problem is that Tesla is not a financial institution, and the price of ETH is not likely to fluctuate as much as BTC, because the design principles of the two are different.
But does Tesla really need cryptocurrencies?
In fact, Tesla also really has cryptocurrency needs, because they need a strong in-vehicle application ecosystem to increase their revenue/users and continuous vehicle upgrades, no tech giant can survive only on products and services, but It is necessary to keep looking for some "innovative business highlights" in order to maintain a leading position in the industry.
Although it has been established for 20 years, Tesla is still a "rookie" in the automotive industry, so they are very eager to add "magic powder" to their fuel tanks, and this "magic powder", we call it For - the ecosystem.
Many technology giants started with a core product, but as their business continues to develop, they often build an ecosystem based on the core product. For example, the core product of Apple's great success is the smartphone iPhone, but then they launched the App Store around the iPhone, and gradually formed an ecosystem. Tesla will need a strong in-vehicle app ecosystem to grow its revenue/users in order to maintain its industry dominance after the future auto market is flooded with EVs.
Twenty years ago, no one would have thought that ordinary people would spend more than 6,000 yuan to own a smartphone. In the automotive industry, Tesla may have a larger market in the future. Therefore, it is necessary to continuously optimize products and build an ecosystem. Rather than reducing Tesla vehicles to one-off innovations.
Tesla can also use Ethereum's decentralized finance (DeFi) use case to build its own ecosystem, and then launch a Tesla ERC-20 token, which can easily handle the "peripheral" built around Tesla's electric vehicles. trade".
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Why should Tesla choose Ethereum?
Maybe everyone forgets another identity of Elon Musk. He was once the co-founder of the payment giant PayPal, so it will not be surprising if Tesla announces the launch of its own cryptocurrency (even if it has nothing to do with Ethereum). However, Ethereum is indeed a good option, especially when Ethereum is upgraded to version 2.0, transaction scalability will become better, and perhaps Elon Musk will not be able to reject Ethereum at that time.
However, as long as the throughput is less than 20 TPS, the cryptocurrency cannot play the role of "global currency".
According to relevant data disclosed in 2019, the network throughput of payment giant Visa is about 1700+ TPS (processing more than 1700 transactions per second). In contrast, transaction processing levels for many cryptocurrencies, including Bitcoin, are severely lagging. The graph below shows the transaction processing speed of various cryptocurrency blockchains (data source: cointelegraph):
(Odaily Jun o-daily Note: Ripple XRP is not a real decentralized cryptocurrency in a sense, because they have indicated that they are owned by banks.)
Now, if a financial network can only process less than 20 transactions per second, almost no one will use it, because the network simply cannot bear the load of running the "world currency". The main goal of Ethereum 2.0 is to expand and increase the throughput to 100K+ TPS (processing more than 100,000 transactions per second), which will far exceed the current transaction processing throughput of Visa.
Unlike Bitcoin, which Tesla invested in, Ethereum is designed to cover global transactions, and by utilizing advanced technical solutions such as sharding, Ethereum 2.0 is expected to achieve this goal. In simple terms, sharding works like this:
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Summarize
Summarize
Bitcoin is considered "digital gold" in the world of cryptocurrencies, but as its value continues to rise, so do the challenges. But just like gold has no transaction value, due to its own design limitations, Bitcoin is likely to no longer have transaction value in the future.
In view of Bitcoin's value against inflation, many large institutional investors are reluctant to make Bitcoin a truly "decentralized" cryptocurrency. Perhaps only volatility can keep Bitcoin's value attractive.For Ethereum
, the past five years have made it more and more mature, and it has gained a large number of use cases, and many people who want to explore P2P transactions are willing to choose Ethereum.For Tesla
, it is possible to buy ETH, and it is possible not to buy ETH. However, considering the development route of the ecosystem, it is very likely that Tesla will finally choose the Ethereum blockchain (note! It is the Ethereum blockchain, not ETH tokens), and build a Tesla-based blockchain based on Ethereum. ecosystem. There is news that Apple is likely to launch the smart electric car iCar in 2024. At that time, Tesla will definitely face tremendous pressure. Apple has a cash reserve of more than 200 billion US dollars, based on the fact that it can buy out the entire ETH market-in fact, Just buying 51% is enough.For ordinary investorsHODL！
